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American Shipper

PSA makes formal $6.33 billion offer for P&O

PSA makes formal $6.33 billion offer for P&O

   The board of London-based ports and ferries group Peninsular and Oriental Steam Navigation Co. has dropped its support for DP World’s takeover offer after PSA International formally made a '3.54 billion ($6.33 billion) bid, equal to '4.70 ($8.39) per share.

   PSA’s bid trumps Dubai state-owned DP World’s '3.3 billion ($5.9 billion) offer, equal to '4.43 ($7.91) per share, made in November.

   Earlier this month, P&O said it had received a takeover approach from Temasek Holdings, the Singapore government-controlled parent company of PSA. In the preceding weeks, Temasek increased its holding in P&O from 2 percent to 4.1 percent, prompting speculation of a rival bid and sending P&O’s shares soaring.

   “PSA’s offer to deferred stockholders of 470 pence represents a 6 percent increase over Thunder’s (DP World’s representatives) offer of 443 pence. With regard to deliverability, PSA has given us undertakings to meet any requirements of the regulatory authorities,” said John Parker, P&O’s chairman.

   “PSA will be a strong owner of P&O’s businesses. We welcome their statement regarding the role P&O’s management and employees will continue to play in the ongoing success of the new group across all business divisions,” Parker added.

   P&O represents the last available opportunity for either PSA or DP World to significantly increase their volumes. A successful bid for P&O would make PSA the world’s largest port operator, overtaking Hutchison Port Holdings and APM Terminals, with a combined annual throughout of 55 million TEUs, based on 2004 figures. Conversely, DP World would leapfrog PSA as the third-largest global port operator if it acquires P&O, with a combined throughput of 33.3 million TEUs.

   “The combination of PSA and P&O, two great companies with complementary strategic, operational and geographical growth positions, will create the strongest business platform that will enable us to serve our global customers better and deliver significant value in the future to our stakeholders,” said Fock Siew Wah, chairman of PSA.

   “We will have an enlarged port group that will have the financial resources, scale and global connectivity to compete even more effectively and successfully in the port marketplace,” Wah said.

   Wah also said that PSA would retain P&O’s loss-making ferries company and had no redundancy plans: “We recognize the importance of P&O’s workforce to our future success and look forward to welcoming them into the enlarged group.”

   Under terms of the offer, Robert Woods, P&O’s chief executive officer, will stay on as CEO of the U.K. businesses and chairman of the ferries division.

   PSA’s offer only needs to be accepted by 50.1 percent of P&O’s shareholders to be successful, whereas DP World’s original offer required 75 percent acceptance.

   In November, P&O agreed to pay DP World a '34 million ($61 million) inducement fee should any rival party make a successful bid.

   DP World said after PSA’s initial approach that it “remains convinced of the compelling commercial logic of its transaction with P&O and continues to be committed to its successful completion.”

   The prospect of a counter-bid from DP World, helped P&O’s share price on the London stock exchange jump 1.68 percent to '5.15 ($9.20) at 1 pm local time today.

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